Q1 2024 Green Brick Partners Inc Earnings Call

Participants

Rick Costello; CFO; Green Brick Partners Inc

Jim Brickman; CEO & DIrector; Green Brick Partners Inc

Jed Dolson; President & COO; Green Brick Partners Inc

Carl Reichardt; Analyst; BTIG

Alex Rygiel; Analyst; B. Riley Securities

Jay McCanless; Analyst; Wedbush Securities Inc.

Alex Barron; Analyst; Birch Center

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Green Brick Partners Inc. First Quarter 2024 earnings call. (Operator Instructions) I will now hand today's call over to Rick Costello, CFO. Please go ahead, sir.

Rick Costello

Welcome to Green Brick Partners earnings call for the first quarter ended March 31st, 2024. Following today's remarks, we will hold a Q&A session. As a reminder, this call is being recorded and will be available for playback. In addition, a presentation will accompany today's webcast and is also available on the company's website at investors.greenbrickpartners.com.
On the call today is Jim Brickman, Co-Founder and Chief Executive Officer; Jed Dolson, President and Chief Operating Officer; and myself, Rick Costello, Chief Financial Officer. Some of the information discussed on this call is forward-looking, including the Company's financial and operational expectations for 2024 and beyond. In yesterday's press release and SEC filings.
The Company detail material risks that may cause its future results to differ from its expectations. The Company's statements are as of today, May 2, 2024, and the Company has no obligation to update any forward-looking statements it may make. The comments also include non-GAAP financial metrics. The reconciliation of these metrics and other information required by Regulation G can be found in the earnings release that the Company issued yesterday and in the presentation available on the company's website.
With that, I'll turn the call over to Jim.

Jim Brickman

Jim, thank you, Rick. I'm pleased to share that brick kicked off 2024 with excellent first quarter results, highlighted by diluted earnings per share of $1.82. It was a record for any first quarter in Company history. We also achieved a record homebuilding gross margin of 33.4%, which again was the highest in the homebuilding industry as shown on slide 4, the solid performance was driven by our superior locations and high growth markets, strong demand for our new loans, our investment-grade balance sheet, and most importantly, excellent execution by our hard-working teams. Our book value grew 27% from a year ago to $29.67 per share at the end of the first quarter of 2024 as we again generated an attractive return on equity of 25.5% for the quarter. On an annualized basis, our accomplishments were achieved with a balance sheet that is stronger than ever due to strong cash flow equity growth in the earnings net of stock buybacks during the last 12 months and $38 million of debt paydown.
Our debt to total capital ratio decreased 550 basis points to 18.3% at the end of the quarter, while our net debt to total capital ratio dropped to 8.2%. This is even more impressive considering that we carry over 86% of our owned and controlled lots on our balance sheet. Unlike most peers. We do not rely on land banking to acquire or develop lots. We believe this strategy puts us in a stronger position due to our lower cost of capital and a greater ability to minimize potential cost escalation between phases because we self-develop most of our lives. We avoid paying retail lot prices on contracts that typically have 6% annual price escalators and have better control of the development costs and timing for our Finish Lines. We believe this approach can mitigate some of the lot inflation pressure that our peers are facing.
Our industry leading gross margins have been earned in part from our self-development strategy, disciplined land underwriting and the diligence expertise in hard work of our land acquisition teams. Our unique land strategy has led to a top quality land pipeline that has fueled our growth. Not only do we operate some of the best markets in the country, but we also have primarily target infill and infill adjacent submarkets where supply and competition are more limits. Sourcing and acquiring high-quality land in these desirable locations requires unique skill set and extensive local knowledge. We take pride in our long standing reputation for quality communities and close-knit relationships with local landowners and sellers.
This is exemplified by our recent joint venture with her family investments and a new community with approximately 2000 lives, an improving suburb of supply in Texas with our diversified homebuilding brands. Unlike many peers, we can offer a variety of products in the community to cater to different homebuyer needs and price points with a limited supply in infill until adjacent communities. We experienced solid demand across our markets and brands as we entered the spring selling season despite higher interest rates, we sold 1,071 net new homes, Q1 2024. This is the second highest in Company history. Just shy of the COVID fueled 1,082 orders in the first quarter of 2021 and with our record low cancellation rate, as shown on slide 5, continued high interest rates have kept existing home inventory near historical lows entered into 2024. Additionally, close to 80% of outstanding mortgages are locked in at rates less than 5%.
As shown on slide 6, the golden handcuff objectives has proven to be more pronounced and infill and infill adjacent submarkets where we have a strong presence and have historically generated over 80% of our revenues including in Q1 2024, even as higher mortgage rates persist potentially tempering demand. We remain bullish and believe the demographic shifts in our strong high-growth markets, together with the systemic housing shortage will continue to sustain a healthy housing market in the cities where we operate.
Additionally, as shown on slide 7, with a growing population of millennials aging into prime home-buying age, their urgency and necessity to buy a home should continue to grow even if mortgage rates remain challenged, many homebuyers who are waiting on the sidelines, need a more permanent housing solution as they hit the next life milestone, whether that's getting married having children or changing jobs.
To conclude, we believe we are well positioned to capture pent-up demand and grow market share with our strategic advantage, as shown on Slide 8, which are one, our footprints and infill and infill adjacent submarkets within high-growth metropolitan areas. Two, superior lots of land positions, three our unique and efficient operational structure, form a strong balance sheet. We remain laser focused on executing our long-term goals for disciplined growth in creating shareholder value.
With that, I'll now turn it over to Rick to provide more detail regarding our financial results.

Rick Costello

Thank you, Jim. Please turn to slide 9 of the presentation. During the first quarter, we delivered 821 homes, an increase of 8% year over year, primarily driven by increased levels of finished and finishing spec home inventory entering the quarter and shorter cycle times ASP. declined 8.6% year over year to $540,000, resulting from closing out infill communities in opening new communities and surrounding infill adjacent areas for the balance of the year, we expect our quarterly ASP. to range from $540,000 to $560,000 each quarter, subject, of course, to changes in mix and business conditions. In total, we generated $443 million of home closings revenues for the first quarter. Notably, homebuilding gross margin reached a new Company high of 33.4%, breaking the previous record of 33.3% achieved in the third quarter of 2023. Our gross margin in Q1 was up 580 basis points year over year and up 200 basis points sequentially.
As shown back on slide 4, we continue to lead the industry in this metric, stronger pricing power in our infill and infill adjacent communities has allowed us to lower incentives, which Ted will review in a few minutes.
Construction costs were down year over year as we delivered smaller square footage homes with lower feature levels. Additionally, a higher mix of deliveries from infill adjacent communities contributed to lower average log costs. Sg&a as a percentage of residential units. Revenue for the quarter increased 120 basis points year over year to 11.4%, primarily from payroll and incentive compensation growth. As we have grown our team and continue to invest in our personnel to sustain future growth.
Net income attributable to Green Brick increased 30% to $83 million and diluted earnings per share for the first quarter grew 33% to $1.82 per share, a record for any first quarter and second highest in company history, limited competition from both existing homes and few new competing communities in our infill and infill adjacent locations have continued to drive demand in these desirable neighborhoods.
During the quarter, net new home orders were 1,071, the second highest in Company history. Revenue from new homeowners was down slightly year over year to $613 million due to the lower ASP discussed earlier. Sequentially, revenue from new home orders increased 61%. Active selling communities at the end of Q1 increased 24% year over year to 98. This growth is juxtaposed against national trends. John Burns consulting reported on April 22nd, 2024, that community count in the top 65 U.S. markets was down 8% year over year in Q1. We believe Green Brick's differentiator and its performance is that Green Brick operates in dynamically growing markets with favorable demographic tailwinds where we have timely acquired land, self-developed lots and brought many new communities to market. Our quarterly absorption rate moderated from record levels in 1Q of 23, but remained robust at 11.4 homes per average active selling community or 3.8 homes per month. Despite higher interest rates. Our cancellation rate for the first quarter reached the lowest level in company history at 4.1%. This was also the lowest among public homebuilding peers, as shown on slide 10, due to strong sales performance across all brands, our backlog value at the end of the first quarter increased 32% year over year and 31% sequentially to $725 million. Backlog ASP. increased 8.9% to $711,000 as opposed to our decrease in closing ASP. This is to our backlog being underweight. Our lower trophy homes trophy, which operates primarily as a spec builder, continue to represent a low percentage of overall backlog. Spec units under construction as a percentage of total units under construction decreased sequentially to 60% at the end of the first quarter due to selling homes at earlier stages of construction. During the first quarter, we started 997 homes, up almost 50% year over year. During the last three quarters, starts averaged over 940 homes per quarter with total starts increasing each quarter. By strategically increasing our starts, we believe we're well positioned to capture additional market share in the coming quarters. Our investment grade balance sheet provides us a strong foundation, positioning us to grow and invest in our future. As Jim stated, at the end of the first quarter, our net debt to total capital ratio was 8.2%, and our total debt to total capital ratio was only 18.3%. One of the lowest among public homebuilding peers. As shown back on slide 8, 100% of our debt as of March 31st, 2024 was fixed rate and an average coupon of 3.4%.
Now to put this in perspective, some of our highly leveraged peers recently issued five year debt at rates above 9%. Our outstanding debt is long term through 2029 and well below current market rates. Additionally, we have $186 million of cash on hand at the end of the quarter as well as 360 million of undrawn amounts under our lines of credit with some financial prudence and discipline being one of our core operating tenets, coupled with strong cash flow from operations, we will continue to evaluate growth opportunities, ensuring they align with our long-term financial goals and strategic vision.
Lastly, as we previously announced, we sold our 49.9% interest in Challenger Homes on February first, 2024. As a result of the transaction, equity income of unconsolidated entities decreased to $2.6 million in Q1 of 24 or 38.6% year over year as we recognized only one month of net earnings from this investment compared to three months in the prior year.
Other income at the same time increased to $15.4 million due to a $10.7 million gain in the sale of our investment in Challenger over the course of our investment in Challenger, we are at an internal rate of return in excess of 50%.
With that, I'll now turn it over to Jeff.

Jed Dolson

Thank you, Rick. As we entered the heart of the spring selling season. Net new orders for the first quarter grew 58% sequentially to 1,071. Demand was strong despite higher mortgage rates because of limited supply in our infill and infill adjacent submarkets. We continue to only offer incentive strategically in select communities and for select homes. During Q1 of 2024, we gave our buyers the flexibility to use the incentive package toward closing costs, limited rate buydowns or a combination of both as expected, the incentives were higher for entry-level products in the periphery locations, but remained limited at our infill communities in incentives for net new orders dropped each month during the first quarter and ended at 3.8% in March. As a result of demand, we were also able to raise prices moderately in approximately two thirds of our communities.
Our borrowers' financial profiles remained unchanged with an average FICO score of 740 and a debt to income ratio of 38%. We believe the dynamics in our infill and infill adjacent locations will continue to create a healthy demand. We will continue to monitor and interest rates and evaluate incentives and product mix carefully. Our industry-leading gross margin of 33.4% gives us plenty of room to adjust pricing as needed. We continued to make incremental improvements on cycle times across our building brands mean cycle time for homes that completed construction in the first quarter of 2024 was 5.5 months, 10 days shorter than the fourth quarter of 2023 and down significantly from 8.6 months in the first quarter of 2023.
Trophy cycle time in Dallas was less than four months and the first quarter of 2024. We will continue to take steps to refine our processes and improve efficiency while still maintaining strong quality control procedures next with strong cash flow, we continue to carefully evaluate our capital allocation strategy to maximize capital efficiency. We announced last quarter that we expect to ramp up our spending in 2024 for raw land acquisition finished lot purchases and land development. During the first quarter of 2024, we spent $91 million in purchasing land and finished lots and $53 million in land development.
Our total lots owned and controlled increased 7% sequentially to approximately 30,800. While land prices remained sticky, we continued to successfully underwrite deals that met our internal IRR threshold of 21%. So we expect to have approximately 51 hundred finished lots at the end of 2024, providing a strong runway for growth and allowing us to capture pent-up demand portfolio just as important, more than 80% of the finished lots are expected to be infill and infill adjacent locations as shown on slides 12 and 13. Another of our business priorities this year is to grow Trophy Signature Homes, both in our existing Dallas submarket as well as our newer markets of Austin and Houston trophy owned and controlled almost 21,000 lots in DFW at the end of first quarter of 2020 for approximately 16,000 of those homesites are in longer life communities and submarkets with long-term growth potential and more affordable prices.
Those lots have an average cost of 11,000 per raw lot creating a tailwind for strong gross margin being the seventh largest homebuilder in Dallas. Fort Worth on a stand-alone basis, have a strong land pipeline. Trophy is well positioned to capture more demand among first-time and first-time move-up buyers with our value rich products in Austin, we have further expanded our pipeline as of the end of the first quarter of 2024. We had over 2000 lots owned and controlled almost double the size from a year ago and in Houston, we're also actively seeking additional new land opportunities. In addition to our first 460 light acquisition that we recently closed as we simultaneously look to build a strong local team.
Lastly, during the first quarter, we completed over $3.7 million in stock repurchases at a weighted average price of $52.23 per share, the remaining dollar value of the shares that may yet be purchased under the 2023 repurchase plan was approximately 99.7 million. Share repurchases remain on the table as we explore investment opportunities for growth, all aimed at delivering the best in class risk-adjusted returns for our shareholders.
With that, I'll turn it over to Jim for closing remarks.

Jim Brickman

Thank you, Chad. In closing, I am extremely pleased with our first quarter results, and we look forward to building on this momentum in the quarters to come. We have a clear vision for our long-term growth and future. And with the intelligent teams we have in place, we're confident in achieving our goals and continuing to deliver exceptional value to our show.
This concludes our prepared remarks, and we will now open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) Carl Reichardt, BTIG.

Carl Reichardt

Thanks, guys. Nice to talk to you about a question about starts in community count. So big ramp in community count and starts, as you pointed out, I think, Rick, was you who said, we've been up a lot. The last couple of three quarters. So as you look out for the rest of the year, do you expect community count to kind of flatten out or continue to grow at a fast pace and same question really related to starts on a year-over-year basis.

Rick Costello

We're not ready to really get a issued guidance on that. You're obviously we've reached a good start pace that has sequentially grown it every quarter.
We're trying to grow trophy, especially. And we've got a lot of lots there to start in larger communities. So we were but we don't want to be specific on the community count.

Carl Reichardt

Thank you, Rick. And then on you talked about 5.5 months cycle time as sort of where you're running now and that's improved quite a bit as you look at sort of what your cycle time was pre Trophy Signature versus where you think it's optimized today. Are you kind of back to what you'd say is normal level for the non trophy business and at normal for trophy business now, so 5.5 months, sort of the right number to think about going forward or do you think that can come down more?

Jim Brickman

This is Jim. I think it will come down a little just because stroke is growing relative to all of our other businesses significantly and trophies entry-level homes are more like 120 day cycle home. So just due to product mix, I think there could be some improvement in cycle times Jed, do you want to expand on that?

Jed Dolson

I know you were already under four months on trophy, so we can scan that inventory three times.

Carl Reichardt

Okay, great. And then last one. If I can squeeze one more in just on SG&A leverage. And you talked about adding some folks to staff up for growth. And I'm assuming that's at least partially connected to community count, but are you expecting that that sort of add-on is largely finished and you should see some better leverage on SG&A over the course of the next year or two or are you going to continue to staff up? Is the growth strong enough that you'll continue to see this a little bit higher levels of SG&A? Thanks, guys.

Jim Brickman

Well, Rick, can chime in on this, but some of the SGA was impacted by incentives in the quarter. And then, Rick, do you want to talk about scaling our business and future SG&A?

Rick Costello

Yes, you're right, Carl, in terms of it, some of it is implicit in the in the growth that we've seen in starts in community count, et cetera. So as I as we see that growth in starts to translate into growth in revenues. You should see improving SG&A.

Carl Reichardt

Thanks, guys.

Rick Costello

You bet.

Operator

Alex Rygiel, B. Riley.

Alex Rygiel

Doug, you nice quarter gentlemen, part of your question here as it relates to gross margin. So gross margins are fantastic and congratulations on that high particularly relative to your peer universe. But I guess my question here is up, are you doing anything different right now sort of in the current quarter that would suggest a material change in homebuilder gross margin in the near term?

Jim Brickman

This is Jim. Short answer, no. I'm a little bit longer answer. We've actually seen Pheno margins maintained. Our incentives have not increased and hopefully the interest rate impact will allow us to maintain these margins.
I know as we continue throughout the rest of 2020 for JNGF., no, I think it's pretty much status quo from the results you're seeing?

Rick Costello

Yes, thanks, Alex. We are seeing that that we're able to control our log costs very well because of our self-development. We don't have what a lot of other builders who are land-light get exposed to with the constant 6% escalator clauses. So as we have come down in our ASP., you've seen our margins sustain themselves and there are lots of metrics that you see. One is that we're 80% of our revenues are in infill and until adjacent locations, 80% of the finishing lots this year. You see some apps in there that show that those continue to be in infill and infill adjacent locations and our land buys are have also been was this last quarter was 80% in those similar locations. So, you know, subject to whatever happens with interest rates, obviously there's variability there with our the 20% at the end of first time buyer, but so far, so good.

Alex Rygiel

And then I believe you said dumb spec homes under construction as a percentage of all homes under construction is about 60% right now, if any, near term expectation for that, that to change a lot either.

Jim Brickman

Yes, this is Jim. We just got our latest weekly report and it's really interesting. Our sales start closings are all in cadence right now, pretty well. Some we don't see a lot of change.

Alex Rygiel

Thanks. Excellent quarter.

Rick Costello

Thanks, Alex.

Operator

Jay McCanless, Wedbush.

Jay McCanless

Hey, good afternoon. Thanks for taking my question. I guess the first one I wanted to ask about was surprised to see sales absorption down on a year-over-year basis and maybe talk about why that happened? And was it just waiting for some nice get developed or So walking in certain areas, kind of walk us through what happened there, please?

Rick Costello

Yes, we were we were quite happy with the win rate that we achieved in Q1. If you recall, Q1 of last year, that was really when sales took off for us. We entered that quarter with a lot more finished and finishing inventory. In fact, one of the reasons that our backlog grew a little bit more this quarter was because we did not have as much finished and finished inventory, but still in a trophy, for instance, is selling and closing 70% of their sales in the same quarter. So they sell it and close it in the same quarter. So with that kind of statistic, it really helps helps to have a quite a bit more of that inventory but you know, but it faulty, for instance, who is the closest in gross margin to us had 3.0 sales per month. So our performance is actually very strong. So we at week $23.8. So we're really strong there.

Jay McCanless

And could you talk about what you're seeing so far in April and not only maybe pricing power and traffic, but also what are you seeing from your competitors in terms of increasing incentives, especially with mortgage rates moving up?

Jim Brickman

Yes, this is Jim. We wrapped up April with very good results, very strong demand. And as we look into May, it looks like that will continue. We may, depending on where rates bounce around, we may tweak incentives a little bit but I don't see that being anything meaningful.

Rick Costello

Yes. We've had a fairly inconsequential change in the incentives from from March to April from Q1 to April. We have been successful in raising prices at approximately two thirds of our communities at the same time that we saw the incentives come down in Q1. So we like what we see the the buyer is back in our markets. So we're we're feeling good.

Jay McCanless

And then the other question I had, just going back to the gross margin question, what historically has been the mix of infill business versus I know Trophy Signature is new but newer, but Kevin, what's that historical mix of business? And are you guys expecting infill to maybe be a heavier percentage this year is that one of the reasons that the gross margin was so strong in 1Q and I know you don't like to give guidance, but if infill is going to be a heavier percentage of the mix this year. Does it follow that we should maybe be a little more optimistic around what our gross margin assumption should be?

Rick Costello

This is Rick. Again, we have been consistent for the last several years, actually with a little more than 80% being infill infill adjacent. So we have we expect our ASP. this year to continue to range. It's always a function of mix. Those $539,000 in Q1 was not a surprise to us. And similarly, we expect between $545,000 to $560,000, the rest of the year. So that kind of indicates that the mix really isn't changing a whole lot from where we're at right now on a wish and all those metrics are revenues closing are our light inventory on the lots that we're buying, the lots that we're finishing continue to be in that same there.

Jed Dolson

Jay, this is Jed. I would just add, we're not running trophy as a low margin business for running trophy is a high margin business, and we do have to compete with other public builders more in that space. But the differential, yes, it's not a night and day differential in gross margin from infill to trophy.

Jim Brickman

Yes, this is Jim. The other thing that's interesting is trophies even in our lower entry-level price point, our cancellations are under 10%. I think we have a better backlog at trophy, not as much as we said, we're selling most of these homes, you know, in a shorter window when they close. But in terms of margin and risk curve, we can't eliminate all risk. But I think trophy is doing a really great job of maintaining margin, not having cancellations. And we're just real excited about some of the new communities they are getting ready to open in markets that we've already had.

Jay McCanless

The last question I have for you guys. Could you talk about what your what cost inflation has been so far this year? And also as part of that also we've heard from some of your competitors that land development costs, we're also going up in addition to just the lot price itself. So maybe could you talk about what type of inflation you're seeing on both those metrics?

Rick Costello

Yes, Jim can chime in as he works on it all the time. Published regional or national have a base price for this amount of land development, but we are not seeing major lot planned development cost increases anymore, and we're not seeing decreases either. We are and don't have a crystal ball where we can forecast this. But we're putting budgets together on a number of large land deals that we're teeing up and getting ready to start. And they're right in line with our projections. And we're not seeing nearly the cost pressures or the supply pressures of not having transformers and all the other stuff that we were experiencing year to about schedule.

Jim Brickman

Yes, we mentioned that half of our lots owned and controlled are in long-term master plan communities where we bought at wholesale prices and sub 12,000 a paper loss. And we feel good about those long-term buys. Most of those are in reimbursable type communities or over time, we'll get reimbursed for development costs in our infill. We're not seeing land development, horizontal costs go up there pretty stable to maybe trending down a percent or two.

Rick Costello

And then one last point on that, one of the big reasons for our year over year decline in ASP. was the transition from more infill to infill adjacent communities, and that was probably the most profound at trophy. But on a year-over-year basis, various P, I think went down by about $100,000. But the lot cost, the finished lot costs. I'm not going to say what the percentage was, but it was all within the same percentage points X point something percent to X point something percent. So it's remarkable that we've been able to maintain that cost structure and therefore our gross margins pretty impressive.

Jay McCanless

Thanks, guys.

Operator

(Operator Instructions) [Alex Barron, Birch Center].

Alex Barron

Yes, hi, guys. Good morning and morning. I wanted to ask about about your land development, which you've emphasized and clearly it's yielding great results on what percentage of your overall, what lots that you guys are involved with our self-development and is that percentage likely to trend up from here?

Rick Costello

We show that calculation actually inside both the earnings release and the 10 Q each quarter. We take the lots owned and controlled. And we back out of the controlled lots land that was parcels that were about to close on, which are actually going to be self-developed. And we come up with that percentage and it runs around 86% to 88%, give or take. And that's that's where we're at at the end of Q1 as well. So it's a preponderance?

Jim Brickman

Alex, we're seeing in certain instances on love to answer your question, we're not going to be a landline. We are seeing the spread and because some builders are trying to stay land-light, no matter what because of what they told Wall Street, they're paying prices for lots and we would never consider on an option basis because the spread between that retail option lot price and what we think we can put a developed lot. We wholly own in a larger master-planned community, small fleet just aren't interested in even considering going up in land like the cost is too great.

Alex Barron

Yes. And how do you guys answer to the, I guess the flip side of the argument that it's less capital and therefore higher return should actually already answered this because I think every time if for some reason, which I have never been able to figure out, everybody thinks you can magically transfer land risk and yield risk to a lot banker. Lot bankers are some of the smartest guys in the real estate business.
A lot of bankers goal was to make the highest returns for the luck, Bankers investors. Their goal was to charge a builder, the highest implied interest rate to the land bank and get the greatest earnest money deposit baking in a totally misaligned structured debt has just been, I think, oversold to our Wall Street know, Alex, one of one of the best stats that I can give you in that regard.

Rick Costello

It's actually twofold. One return on assets, return on equity. Our return on assets in Q. one was the highest amongst all of our peers. We don't publish it, but it was right at 17% on an annualized basis. And our return on equity in Q1 on average equity was 25.5%. So if it's going to show up, it's going to show up in those returns. I think a lot of the folks who are land-light a lot of them, at least in the small and mid-cap builder range are highly leveraged. So they're really trying to juice those equity returns, but it's not working where they have to be land-light.

Jim Brickman

Yes, it means it's a it's a positive feedback loop that's been created. And frankly, in our two largest markets, Dallas by far and Atlanta, we are the one of the largest lot developers. There are lot developers to develop on these lines for land land guys in Atlanta Ordina. That's why you don't say NBR being a dominant builder in Atlanta.

Alex Barron

Got it. If I could ask another question on what is the average size of your communities and also, you know, you only self developed for yourself to keep all the lots or do you sell to other builders as well?

Jim Brickman

On most of the time we develop just for us. We have a large deal that we are looking at closing in about three weeks that we have builders calling us like crazy when you sell less slots. And I think what we're trying to decide right now is only would we consider selling lots in this 1,200 home neighborhood. It will take and return give us lots and some other neighborhoods where we have more storefronts. So we can include increase our sales and revenues. So that's a fluid conversation. I doubt whether we're going to get the benefit of the bargain and we will probably sell develop and be the only building in those communities.

Alex Barron

Appreciate the answer. I'll go to the back of the queue. Thank you.

Rick Costello

Thanks, Alex.

Operator

At this time, there are no further audio questions. This does conclude today's call. Thank you for joining. You may now disconnect.